Government’s Share of petrol pump price dropped to 66p in the pound in 2009/10

The share of petrol pump prices going to the Government has dropped from 81 per cent in 2001/02 to 66 per cent in 2009/10, according to figures revealed today by ONS. However, this is still higher than the low of 62 per cent in 2008/09.

The Government’s share of the pump price has dropped because, although petrol duty has been rising, it has not kept up with overall fuel price rises.

The data also show that the poorest 20 per cent of households paid almost twice as much of their income in duties on fuel than the richest 20 per cent. In 2009/10, the poorest 20 per cent of households paid 3.5 per cent of their disposable income on duty, compared with only 1.8 per cent for the top 20 per cent. Overall, the average UK household spent 2.3 per cent of its disposable income on duties on fuel.

However, in cash terms, the richest 20 per cent of households paid almost three-times the amount paid by the bottom 20 per cent. In 2009/10 the richest 20 per cent of households spent £1,062 on petrol taxes, compared with £365 for the poorest 20 per cent of households. Overall, the average UK household spent £677 on duties on fuel in 2009/10.

Background notes

Household disposable income is that which is available to households for consumption, and is equal to earnings and investment income plus cash benefits (provided by the state) less direct taxes. Further details of the calculation of household disposable income can be found in The effects of taxes and benefits on household income article

Spending on petrol and diesel is collected in the Living Costs and Food survey. The quantity of petrol and diesel purchased is calculated by dividing the spend reported by the average petrol and diesel price at that time. This allows the VAT and fuel duty components of petrol and diesel spending to be calculated.

Average petrol prices are taken from data from the Department of Energy and Climate Change . No differentiation is made for the price of different types of petrol and diesel. The methodology used in this article differs from that used by the Department of Energy and Climate Change as this article uses HMRC diesel and unleaded petrol duty rates throughout, while the Department of Energy and Climate Change use ultra low sulphur rates at some points in their time series.